Monday, July 21, 2008

The Gini index of income and wealth distribution

The first two countries in the world with the most equal income and wealth distribution are constitutional monarchies!

The Gini coefficient was developed by the Italian statistician Corrado Gini and published in his 1912 paper „Variability and Mutability“ (Variabilità e mutabilità). It is a measure of statistical dispersion most prominently used as a measure of inequality of income distribution or inequality of wealth distribution. It is defined as a ratio with values between 0 and 1: A low Gini coefficient indicates more equal income or wealth distribution, while a high Gini coefficient indicates more unequal distribution. 0 corresponds to perfect equality (everyone having exactly the same income) and 1 corresponds to perfect inequality (where one person has all the income, while everyone else has zero income). The Gini coefficient requires that no one have a negative net income or wealth. Worldwide, Gini coefficients range from 0.23 in Sweden to 0.707 in Namibia.

The Gini index is the Gini coefficient expressed as a percentage, thus Serbia’s Gini index is 30% (Mathematically, this is equal to the Gini coefficient of 0.3, but the percentage sign is often omitted in the Gini index.)